{"id":135777,"date":"2021-09-21T19:46:46","date_gmt":"2021-09-21T14:16:46","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=135777"},"modified":"2021-09-25T15:11:42","modified_gmt":"2021-09-25T09:41:42","slug":"chinas-lehman-moment","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/chinas-lehman-moment\/","title":{"rendered":"China’s ‘Lehman moment’"},"content":{"rendered":"\n
What is the news?<\/b><\/span><\/h5>\n

Failure of Evergrande (China’s too big to fail real estate sector developer) would affect economic activities in China, which in turn, may have cascading negative consequences for the world.<\/span><\/p>\n

Introduction<\/strong><\/h5>\n

Financial stress in China\u2019s largest real estate developer, Evergrande, has led to turmoil across global markets.<\/p>\n

Evergrande has a total debt exposure (including trade payables) of over $300 billion, which includes $19 billion in offshore US dollar-denominated bonds.<\/p>\n

Recently, the real estate giant has issued warnings that it can default on $80 million worth of interest payments.<\/p>\n

Experts are referring to this as \u201cChina\u2019s Lehman moment<\/strong>\u201d, in comparison to the 2008 bankruptcy of Lehman Brothers, which was a trigger for the global financial crisis.<\/p>\n

The financial stress has been caused by tighter controls imposed by the People\u2019s Bank of China, and a slowdown in housing demand.<\/p>\n

How Evergrande\u2019s crisis is affecting the global economy?<\/strong><\/h5>\n

Impact on global stock market:<\/strong> Fears of this default have led to a crash across Chinese debt assets. Further, it has triggered big sell-offs in stock markets across Hong Kong, other Asian markets, including India, as well as in Europe. It has also triggered a panic sell-off in industrial metals and fuels. The prices of real estate stocks in Hong Kong have dropped to 2016 levels, while real estate bonds yields have spiked to 14.5 per cent.<\/p>\n

Impact on commodity metal and fuel:<\/strong> A fall in Chinese activities will also hurt commodity metal and fuel players, given China\u2019s dominance in manufacturing.<\/p>\n

Impact on Exporters<\/strong>: If the yuan falls, exporters everywhere else will also be under intense pressure.<\/p>\n

Impact on Global central banks<\/strong>: If it does default, every major central bank will probably open liquidity taps to ensure global markets don\u2019t freeze in contagion.<\/p>\n

Source<\/strong>: This post is based on the article \u201cChina’s ‘Lehman moment’<\/strong>\u201d published in Business Standard<\/strong> on 21st Sep<\/strong> 2021<\/strong>.<\/p>\n","protected":false},"excerpt":{"rendered":"

What is the news? Failure of Evergrande (China’s too big to fail real estate sector developer) would affect economic activities in China, which in turn, may have cascading negative consequences for the world. Introduction Financial stress in China\u2019s largest real estate developer, Evergrande, has led to turmoil across global markets. Evergrande has a total debt… Continue reading China’s ‘Lehman moment’<\/span><\/a><\/p>\n","protected":false},"author":10316,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1566,164,9],"tags":[8751,8844],"class_list":["post-135777","post","type-post","status-publish","format-standard","hentry","category-daily-factly-articles","category-international-relations-daily-factly-articles","category-public","tag-india-and-its-neighborhood","tag-india-china-relations","entry"],"jetpack_featured_media_url":"","views":{"total":0,"cached_at":"","cached_date":1704812531},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/135777","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10316"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=135777"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/135777\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=135777"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=135777"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=135777"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}